After falling from the "throne," Bank of Beijing accelerates clearing its accounts.

Once the cycle’s gears begin to turn, even a giant that has dominated the throne for a dozen years must learn to regain balance in the midst of weightlessness.

With the disclosure season for the first quarter 2026 now concluded, the reshuffling of the city commercial bank sector is officially reflected on the financial statements—

Following its first overtaking in 2025, Bank of Jiangsu further widened its gap with Bank of Beijing in Q1 2026, achieving a total asset size of 5.58 trillion yuan and comprehensively surpassing its rival in revenue, profit, and other core profitability indicators.

But this was not a one-sided, uncontested crush; in Q1 2026, Bank of Beijing recorded a revenue growth of 14.43%, 6.02 percentage points ahead of Bank of Jiangsu, showing the rivalry remains fierce.

However, a single quarter’s reversal in indicators may not indicate a change in the long-term competitive trend between the two banks; it is more the result of short-term financial maneuvers.

Financial data for Bank of Beijing in the Q4 2025 and Q1 2026 reports showed an extreme contrast:

In Q4 2025, Bank of Beijing posted a rare quarterly net loss attributable to parent of minus 978 million yuan; yet in the subsequent Q1 2026, its operating income surged by 14.43% YoY, and net profit grew by 5.55%.

Such significant financial fluctuations to some extent indicate signals of financial adjustment at Bank of Beijing.

Bank of Beijing, after its old expansion model failed, began a comprehensive restructuring: on the financial side, it thoroughly cleared risks through short-term profit pain; on the strategic side, it decisively abandoned the scale-only approach, retreated to defend the Beijing-Tianjin-Hebei region alliance, and bet heavily on tech finance and an “All in AI” ecosystem.

This transformation of retreat and reshaping is a response to the lost throne, as well as its exploration to break through the new cycle.

Fade of Geographical Advantages & Stalled Asset Expansion

The scale ceiling for city commercial banks is essentially a reflection of the region’s macroeconomic strength.

Over the past five years, Bank of Jiangsu’s compound annual asset growth rate reached 16.1%, outperforming Bank of Beijing’s 11.23%;

This Q1, Bank of Jiangsu's assets and loan balances surged 25.15% and 18.91% YoY, while Bank of Beijing's respective growth rates were only 10.69% and 3.42%.

Traditional credit expansion has stalled due to objective circumstances. The Yangtze River Delta’s active private sector and robust manufacturing loan demand helped social financing in Jiangsu grow by 3.2 trillion yuan in 2025, giving Bank of Jiangsu ample room for credit;

By contrast, although Beijing’s Q1 GDP growth stayed at 5.9%, its industrial structure has deeply pivoted to tech innovation and high-end, asset-light service sectors, resulting in sharp declines in demand for traditional, fixed asset-backed lending like infrastructure and real estate.

To maintain asset scale, Bank of Beijing has significantly adjusted its asset-liability structure in recent years:

First, increased allocation to interbank assets. From 2022-2025, the proportion of interbank assets to total assets rose from 7.62% to 11.68%, rising further to 11.8% this Q1, now the highest among A-share listed banks.

This massive expansion of low-yield assets preserved scale but weighed down profitability. In Q1, Bank of Beijing’s ROE was just 2.12%, ranking 28th among 42 listed banks.

Second, continued increase in financial investments. By end-Q1, financial investment assets made up 35.05% of total assets.

In 2025, with rates falling, Bank of Beijing used scale to offset price, ramping up allocations to government-backed bonds. Financial investment assets increased 21.96% YoY to 1.75 trillion yuan.

However, this huge investment also deeply tied its performance to the bond market, making its profit model fragile.

For example, in Q1, riding the bond market rally, fair value changes generated 635 million yuan in gains, core to the 14.43% revenue surge, but in 2025, that same indicator posted a 1.31 billion yuan loss due to market fluctuations.

Another issue: financial investments pushed up risk-weighted assets. By Q1’s end, Bank of Beijing’s core tier 1 capital adequacy ratio fell to 8.59%, ranking 37th among listed banks.

Seeking returns from within led to capital pressure. At the same time the traditional expansion path hit the capital ceiling, Bank of Beijing’s “southbound breakthrough” to break geographical constraints also ran into real-world obstacles.

In 2023, then-chairman Huo Xuewen advocated “recreating a Bank of Beijing in the Yangtze River Delta.” To improve its cross-region capabilities, Bank of Beijing established a regional approval center there in 2025.

Yet amid fierce competition on this away turf, managerial optimization didn’t convert into tangible asset expansion.

In 2025, Bank of Beijing’s Yangtze River Delta assets amounted to 676.6 billion yuan, with 6.26% growth far behind local rivals Bank of Jiangsu (24.78%) and Bank of Nanjing (16.6%).

Without geographical bonuses, Bank of Beijing has yet to show sufficient competitiveness in new markets.

Falling behind in scale, asset structure imbalances, capital constraints, and difficulty breaking out elsewhere—reality declares the old model of expansion by spreading outlets and chasing scale has reached its end.

Hundred Billion Impairment & Cleared Risks

Saying goodbye to the old expansion-by-outlets model, a fresh start in the new cycle hinges on fully clearing historical burdens.

In Q4 2025, Bank of Beijing made 12.807 billion yuan in credit impairment provisions, causing a quarterly loss of 978 million yuan.

Under an industry norm of minimal provisioning and smoothing profits, such a large increase is rare—

In 2025, Bank of Beijing’s new provisions totaled 5.147 billion yuan, second only to ICBC, CCB, and China Minsheng among A-share banks.

One reason may be low coverage ratios; by Q3 2025, coverage was just 195.79%, below average (ranked 35th/42).

But looking deeper, this appears a strategic “active mine clearance,” with management aiming for a one-off solution to legacy burdens tied to property and local government businesses, both on and off the books.

The direct driver behind Q4 impairment surge was financial investment items.

In 2025, credit impairments on on-balance-sheet loans were actually lower YoY, but credit impairments on financial investment soared to 8.21 billion yuan, a nearly seven-fold increase; of this, impairments on amortized cost assets alone hit 7.82 billion yuan.

In banking business structures, amortized cost assets often include off-balance channels like non-standard trusts and asset management plans;

Market analysis suggests that the data spike likely means management wrote down large amounts of assets previously invested in real estate, local government financing vehicles, or certain bonds.

Meanwhile, on-balance-sheet loan risks are also being exposed faster.

Though the end-2025 NPL ratio fell slightly to 1.29%, underlying risk migration was intense: substandard loan migration rate hit 69.07%; doubtful loans rose from 58.65% to 69.32%; loss loans nearly doubled from 6.534 billion to 11.903 billion yuan.

This shows the bank is proactively exposing and writing off previously concealed bad debts.

Bank of Beijing clarified in its financials that its full-scale credit platform business balance dropped 38% from the start of the year; for some legacy real estate risks, it actively used market-based ways such as listing transfers to divest.

As a city commercial bank once highly dependent on local governments and real estate giants, Bank of Beijing accumulated risk as the cycle turned down.

In 2025, it actively disposed of non-performing property assets, selling bad debts from groups like Tahoe and R&F Properties, centralized provisioning and write-offs indicate management is proactively severing ties with the old “government-enterprise, heavy real estate” model.

Tied to personnel changes, this concentrated provisioning node takes on deeper meaning.

Early 2026, former chairman Huo Xuewen retired by age, Guan Wenjie, previously president of Huaxia Bank and chairman of Beijing Rural Commercial Bank, formally took over as Party Secretary and Chairman of Bank of Beijing.

New management often marks a window for clearing historical accounts.

Bank of Beijing president Dai Wei explained this financial move as proactive risk avoidance—“retreat to advance.”

“Better to clear it now than leave problems for later,” Dai Wei said.“Filling up the tank to recharge for better progress; crouching is for a higher jump. Only by shedding historical burdens can we move forward lightly.”

Chief Risk Officer Fang Xu elaborated that the full provisioning across all asset categories this time seeks to resolve legacy investment risks once and for all, and clarified that “this year and for the foreseeable future there will be no similar large, concentrated provisioning.”

Follow-up data shows that this short-term profit pain stabilized asset quality.

By end-Q1 2026, Bank of Beijing's NPL ratio edged up to 1.32%, provisioning coverage held up at 198.04%;

The prior large provision release fully mitigated legacy risks, easing future provisioning pressure. Combined with rebounding investment gains, Q1 net profit attributable to parent rebounded 5.55% YoY.

Retreat, Alliance & AI Breakthrough

After clearing financial risks, restructuring business strategy became urgent.

With the Yangtze River Delta’s “southward march” blocked, retreating to stabilize the Beijing-Tianjin-Hebei base became the survival bottom line.

In March 2025, Bank of Beijing, Huaxia Bank, and Beijing Rural Commercial Bank signed a high-profile strategic cooperation agreement, marking a financial alliance in the capital.

Facing aggressive cross-regional penetration by top Yangtze River Delta city banks into the Beijing-Tianjin-Hebei market, if these three local giants continued to cannibalize each other for big government-enterprise clients, it would be self-destructive. This alliance essentially meant consensus on not outcompeting each other internally and defending against outsiders.

The rapid formation of this defense owed much to deep ties among executives.

Newly installed Bank of Beijing chairman Guan Wenjie previously worked at Huaxia Bank and Beijing Rural Commercial Bank, linking the capital’s financial “Iron Triangle”;

Also, the three institutions' executives have frequently rotated in recent years, giving the three banks high strategic and business alignment—forming a defensive wall in their Beijing-Tianjin-Hebei home base that's hard for out-of-province peers to breach.

Defending ensures survival, but only attack revives strength.

With old expansion bonuses gone, Bank of Beijing didn't stick to traditional city bank paths but actively leveraged the capital’s unique resources—

Fully aligning itself with Beijing’s status as China’s national tech innovation hub, it is remaking itself as a new bank with a tech finance identity.

This is not just finding alternatives to real estate and infrastructure, but leapfrogging in line with the spirit of the times.

Data shows progress in this transformation.

By Q1 2026, tech finance loan balances had reached 486.4 billion yuan;

In Beijing, it serves 82% of ChiNext customers, 76% of STAR Market customers, and 75% of Beijing Stock Exchange-listed firms, extremely high market penetration forming strong competitive barriers.

If credit inclination is mere business surface, the “All in AI” infrastructure strategy demonstrates the ambition to rebuild its fundamentals.

According to CIO Ming Lisong, tech investments as a share of revenue have remained above 4.5% in recent years, with peak growth of 22.45%, and tech headcount nearly tripled since the start of the 14th Five-Year Plan.

This puts it in the absolute lead among peers; hub statistics show that among 13 listed banks with consistent disclosures, only 1 maintains a tech investment ratio above 4.5% for three consecutive years.

A telling detail: leveraging private cloud AI architecture, Bank of Beijing has launched autonomous agents in sandbox environments;

This shows the bank is embedding AI in core financial productivity scenarios like investment analysis, credit approval, and customer engagement that require deep context understanding.

Looking ahead: losing the city commercial bank top spot may be Bank of Beijing's greatest setback since its founding.

From actively clearing legacy risks and pragmatic alliance defense to deep turns toward tech finance and AI, the bank is undergoing a painful transformation.

Financial effects of this transformation are starting to show.

In Q1 2026, its net interest margin fell to 1.23%, but declined just 8.32 basis points YoY, outperforming Bank of Jiangsu's steep 27.84 point drop; a rebound in light capital and mid-income business lifted non-interest net income to 29.58%, gradually undoing fragile reliance on interest spreads.

Shedding legacy burdens and establishing a new tech engine combined with pragmatic strategy has paved Bank of Beijing’s road to renewal.

But the ultimate results of its retreat and renewal await ongoing validation in subsequent financial reports.

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